Stock index manipulation around election announcements: evidence from Pakistan stock exchange

  • Authors

    • Shahbaz Khan School of Finance, Zhongnan University of Economics and Law,Wuhan
    • Razzi Abbas Jafri National Bank of Pakistan
    • Nida Baig College of Public Administration, Huazhong University of Science and Technology,Wuhan
    • Muhammad Shaique School of Accounting, Zhongnan University of Economics and Law,Wuhan
    • Muhammad Usman School of Finance, Zhongnan University of Economics and Law,Wuhan
    2017-07-01
    https://doi.org/10.14419/ijaes.v5i2.7792
  • Political Elections, Pakistan Stock Exchange, Stock Returns, Market Efficiency, Event Study.

  • The purpose of this study is to find out the impact of political general elections of Pakistan on KSE-100 index. We employed Event study methodology on closing prices of KSE-100 index over the time period January, 1998 to May, 2013. During our sample period, 3 events of political general Elections occurred i.e., Event1 in 2002, Event2 in 2008, and recently Event3 in 2013. We construct an Event window of 11 days consisting of 5 pre-event days, 1 on-event day, and 5 post-event days. Results of this study show that Events 1 -and 2 put significant negative impact on stock returns, while Event3 demonstrates a significant positive impact on stock returns. This study also revealed the pre -and post-event comparison for all of the three events and, suggested that as soon as the political situation of the country changes, behavior of investors towards political general election also changes. Manipulation in stock index has always been remained an inconclusive phenomenon for investors and policy makers. So, further evidence on an individual country level might suggest fruitful guidelines to both investors and policy makers.

    Author Biography

    • Shahbaz Khan, School of Finance, Zhongnan University of Economics and Law,Wuhan
      Ph.D Candidate, School of Finance

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  • How to Cite

    Khan, S., Jafri, R. A., Baig, N., Shaique, M., & Usman, M. (2017). Stock index manipulation around election announcements: evidence from Pakistan stock exchange. International Journal of Accounting and Economics Studies, 5(2), 87-91. https://doi.org/10.14419/ijaes.v5i2.7792